The Gillard government plans to water down reforms to political donation laws as part of a possible deal with the Liberal party to achieve long-term support for extra public funding of $1 per vote to provide $14m towards the administration costs of all political parties.

The changes have deeply angered some Labor MPs, including party veterans Senator John Faulkner and backbenchers Daryl Melham and Stephen Jones, who have told colleagues they run counter to Labor’s policy platform and contradict donation reform legislation that has already passed the House of Representatives.

A fiery meeting on Monday of the expert sub-committee of caucus refused to back the changes. The minister proposing them, the attorney general, Mark Dreyfus, called a highly unusual late-night caucus briefing on the plan for 9.30pm on Monday before he tries to push it through the full caucus on Tuesday.

Labor’s original electoral reform bill, now before the Senate, would reduce the threshold at which political donations must be disclosed to the Australian Electoral Commission from $12,000 to $1,000 – a move the ALP has long championed.

It is understood the proposed new legislation, would reduce the threshold to $5,000, and would increase the value beyond which anonymous gifts to political parties are banned from $50 to $1,000.

But critically, for political parties struggling as the overall level of private donations decline, it would also allow them to claim $1 per vote for “party administration” expenses on top of the $2.47 per vote they already get after elections to help pay for their campaigns.

Like the per vote funding to pay for campaigns, the additional $1 per vote would be adjusted annually for inflation. There are 14.4 million enrolled electors.

The bill would also mean political parties had to report donations more frequently, which its backers say would improve transparency.

MPs raised deep concerns about the changes when Dreyfus discussed them with a caucus subcommittee on Monday and they refused to sign off on them. None made public comment.

Former special minister of state Gary Gray had revealed he was trying to reach agreement with the Coalition on a bipartisan proposal for public funding of party administration, but had not revealed the amount being discussed. After the March ministerial reshuffle that negotiation fell to Dreyfus.

The Liberal party’s federal director, Brian Loughnane, said on Monday the party had “always said it is willing to consider any proposal which is comprehensive and fair to all parties”.

But he said Labor had “been talking about changes to funding and disclosure for four years under four different ministers and the government has not yet presented a final bill”.

The Greens, strong backers of donation reform, had intended to support the existing Labor bill in the Senate.

But the Greens’ leader, Senator Christine Milne, said on Monday night her party would oppose any legislation that didn’t “clamp down on corporate donations and runaway electoral spending to stop what is now an ‘arms race’”.

She said: “We have long campaigned for donation reform. The whole point of a public funding model is to stamp out the growing influence of corporate donations on public policy. Any increase in public funding without caps or curbs on corporate donations will only accelerate the arms race,” she said.

In 2011 a joint parliamentary committee recommended public funding for party administration, in part to pay for the costs of complying with the donation disclosure laws themselves.